Preparing to Revalue Account Balances

Periodically, you may need to revalue the base currency of the balance sheet accounts that you maintain in foreign currencies to reflect changes in value due to fluctuations in exchange rates. The General Ledger Revaluation process (FSPCCURR) adjusts the base currency value of the account balances by creating adjusting entries for the accounts being revalued. It creates corresponding entries for any gain or loss that results from the revaluation. Revaluation typically takes place at the end of each accounting period prior to translation.

For example, suppose that a company whose base currency is U.S. dollars (USD) made the following cash deposits in Swiss francs (CHF):

At month end, revaluation takes place at the CHF to USD exchange rate of 0.55. The account is revalued at 165 USD (300 * 0.55 = 165). The following journal entry recognizes the increase in value with a debit of 15 USD to the asset account and a corresponding credit to the revaluation gain account:

When you want the results of revaluation to go into accounts that are different from the source accounts, use the Target ChartField Entry page, on which you can indicate target unrealized gain and loss accounts.

Setting Up Revaluation

In General Ledger, the following processing takes place when you revalue accounts:

• Revaluation gains and losses are calculated for accounts maintained in foreign currencies.

• Balances of affected accounts are adjusted to the new value.

  The system generates an adjusting entry to the base currency balance plus a corresponding entry to the revaluation gain/loss account.

You can choose to:

• Create journal entries to reverse the revaluation results in the following period.

• Create journal entries to provide an audit trail of revaluations automatically.

• Report revaluation gains and losses using PS/nVision.